KUALA LUMPUR: Several Malaysian firms, including Pharmaniaga Bhd and Capital A Bhd, are making strong progress in their financial restructuring efforts and are on course to exit Bursa Malaysia's Practice Note 17 (PN17) status in 2025, signalling a notable recovery in their operational and fiscal health.
PN17 and Guidance Note 3 (GN3) are designations by Bursa Malaysia for financially distressed companies listed on the Main Market of the stock exchange. These classifications apply to firms experiencing issues such as shareholders' equity dropping below 25 per cent of paid-up capital or loan defaults.
Affected companies are required to submit a regularisation plan—typically within 12 months—or risk suspension and potential delisting.
Currently, 24 companies are classified under PN17 and GN3 on Bursa Malaysia — representing about 2.34 per cent of the 1,025 listings across the Main and ACE Markets.
Other notable PN17 firms include Sapura Energy Bhd, Sarawak Cable Bhd, Bintai Kinden Corp Bhd, and Ho Hup Construction Bhd. GN3-listed companies include Asdion Bhd, Lambo Group Bhd, and Waja Konsortium Bhd.
Pharmaniaga advances recovery Plan
Pharmaniaga, listed as a PN17 entity in February 2023, has made substantial progress in implementing its regularisation plan. In March 2025, shareholders approved several key measures, including a rights issue to raise up to RM353.5 million, a private placement of up to RM300 million (minimum RM215 million), and a capital reduction of RM520 million.
Despite these efforts, external auditor Ernst & Young flagged material uncertainties in Pharmaniaga's FY24 financial statements, noting that current liabilities exceeded current assets by RM748.8 million, with a group capital deficiency of RM145.9 million.
EY pointed out that as of Dec 31, 2024, the group's and company's current liabilities exceeded current assets by RM748.8 million and RM827.2 million, respectively.
Additionally, the group registered a capital deficiency of RM145.9 million, indicators that suggest uncertainty about the company's ability to continue operating as a going concern.
Despite this, Pharmaniaga has reassured shareholders of its recovery path, citing clear strategies and resilient operations that have contributed to steady progress.
The company said key performance indicators continue to show improvement as it works toward exiting PN17 status.
Addressing the auditor's statement, Pharmaniaga noted that the material uncertainty reference is standard for companies in the midst of a turnaround and emphasised that EY's audit opinion remains unqualified — a sign of continued confidence in the group's recovery efforts.
Pharmaniaga recorded a 15.3 per cent increase in net profit for the first quarter of 2025 (1Q25), reaching RM29.58 million.
This was supported by a 9.4 per cent year-on-year growth in revenue, which rose to RM1.06 billion from RM964.96 million in the same period last year.
The company said it is actively progressing with the execution of its PN17 regularisation plan following shareholders' approval of the proposed measures.
Capital A nears the final phase of regularisation
Capital A Bhd, the parent company of AirAsia, which entered PN17 status in January 2022, received Bursa Securities' approval for its regularisation plan in March 2025.
The plan includes a RM6 billion capital reduction, the divestment of its aviation business to AirAsia X Bhd, and a pivot toward digital, logistics, and fintech ventures.
With shareholder approval already in place, the company will next seek confirmation from the High Court for the capital reduction, pending the announcement of the entitlement date for the proposed disposal.
Chief executive officer Tony Fernandes reportedly said that the company has endured challenging times but has successfully built strong business pillars that are now set for growth, adding that the ongoing exercises are crucial in paving the way for its next phase of expansion.
"This is pivotal for Capital A. With shareholder and redeemable convertible unsecured Islamic debt securities holders support for capital reduction, we are taking bold steps to complete our turnaround and move beyond PN17," he said in a statement.
